Can I Collect a Judgment Against a Dissolved Corporation?
Full Question:
Answer:
Section 2011 of the California Corporations Code allows any insurance assets held by the dissolved corporation that may be available to satisfy claims.” If any of the assets of the dissolved corporation have been distributed to shareholders, then an action can be brought against shareholders of the dissolved corporation to the extent of their pro rata share of the claim or to the extent of the corporate assets distributed to them upon dissolution of the corporation, whichever is less. A shareholder’s total liability, however, may not exceed the total amount of assets of the dissolved corporation distributed to the shareholder upon dissolution of the corporation.
A lawsuit against a shareholder of a dissolved corporation must be brought prior the expiration of the statute of limitations applicable to the cause of action, but no later than four years after the effective date of the dissolution of the corporation. However, this four-year statute of limitations only applies when you are seeking assets that have been distributed to shareholders.
Please see the following CA statutes:
2011. (a) (1) Causes of action against a dissolved corporation,
whether arising before or after the dissolution of the corporation,
may be enforced against any of the following:
(A) Against the dissolved corporation, to the extent of its
undistributed assets, including, without limitation, any insurance
assets held by the corporation that may be available to satisfy
claims.
(B) If any of the assets of the dissolved corporation have been
distributed to shareholders, against shareholders of the dissolved
corporation to the extent of their pro rata share of the claim or to
the extent of the corporate assets distributed to them upon
dissolution of the corporation, whichever is less.
A shareholder's total liability under this section may not exceed
the total amount of assets of the dissolved corporation distributed
to the shareholder upon dissolution of the corporation.
(2) Except as set forth in subdivision (c), all causes of action
against a shareholder of a dissolved corporation arising under this
section are extinguished unless the claimant commences a proceeding
to enforce the cause of action against that shareholder of a
dissolved corporation prior to the earlier of the following:
(A) The expiration of the statute of limitations applicable to the
cause of action.
(B) Four years after the effective date of the dissolution of the
corporation.
(3) As a matter of procedure only, and not for purposes of
determining liability, shareholders of the dissolved corporation may
be sued in the corporate name of the corporation upon any cause of
action against the corporation. This section does not affect the
rights of the corporation or its creditors under Section 2009, or the
rights, if any, of creditors under the Uniform Fraudulent Transfer
Act, which may arise against the shareholders of a corporation.
(4) This subdivision applies to corporations dissolved on and
after January 1, 1992. Corporations dissolved prior to that date are
subject to the law in effect prior to that date.
(b) Summons or other process against such a corporation may be
served by delivering a copy thereof to an officer, director or person
having charge of its assets or, if no such person can be found, to
any agent upon whom process might be served at the time of
dissolution. If none of such persons can be found with due diligence
and it is so shown by affidavit to the satisfaction of the court,
then the court may make an order that summons or other process be
served upon the dissolved corporation by personally delivering a copy
thereof, together with a copy of the order, to the Secretary of
State or an assistant or deputy secretary of state. Service in this
manner is deemed complete on the 10th day after delivery of the
process to the Secretary of State.
(c) Every such corporation shall survive and continue to exist
indefinitely for the purpose of being sued in any quiet title action.
Any judgment rendered in any such action shall bind each and all of
its shareholders or other persons having any equity or other interest
in such corporation, to the extent of their interest therein, and
such action shall have the same force and effect as an action brought
under the provisions of Sections 410.50 and 410.60 of the Code of
Civil Procedure. Service of summons or other process in any such
action may be made as provided in Chapter 4 (commencing with Section
413.10) of Title 5 of Part 2 of the Code of Civil Procedure or as
provided in subdivision (b).
(d) Upon receipt of such process and the fee therefor, the
Secretary of State forthwith shall give notice to the corporation as
provided in Section 1702.
(e) For purposes of Article 4 (commencing with Section 19071) of
Chapter 4 of Part 10.2 of Division 2 of the Revenue and Taxation
Code, the liability described in this section shall be considered a
liability at law with respect to a dissolved corporation.
§ 2010 Corp.
(a) A corporation which is dissolved nevertheless continues to exist
for the purpose of winding up its affairs, prosecuting and defending
actions by or against it and enabling it to collect and discharge
obligations, dispose of and convey its property and collect and divide
its assets, but not for the purpose of continuing business except so far
as necessary for the winding up thereof.
(b) No action or proceeding to which a corporation is a party abates by
the dissolution of the corporation or by reason of proceedings for
winding up and dissolution thereof.
(c) Any assets inadvertently or otherwise omitted from the winding up
continue in the dissolved corporation for the benefit of the persons
entitled thereto upon dissolution of the corporation and on realization
shall be distributed accordingly.
